Capital predesign thresholds

AN ACT Relating to predesign thresholds; amending RCW 43.88.110, 1
43.82.035, and 43.88.0301; and creating a new section.2
BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF WASHINGTON:3
NEW SECTION. Sec. 1. The legislature finds that construction 4
costs have increased rapidly in recent years, while the state's cost 5
threshold for predesign of capital facilities has remained constant 6
since 2021. Therefore, to improve governmental efficiency, the 7
legislature intends to update the cost threshold for predesign 8
requirements to better align with the current costs of construction. 9
Further, the legislature also intends to address future construction 10
cost changes by adding an inflation adjustment factor to the 11
predesign cost threshold.12
Sec. 2. RCW 43.88.110 and 2021 c 54 s 2 are each amended to read 13
as follows: 14
This section sets forth the expenditure programs and the 15
allotment and reserve procedures to be followed by the executive 16
branch for public funds. 17
(1) Allotments of an appropriation for any fiscal period shall 18
conform to the terms, limits, or conditions of the appropriation.19
H-2784.2
HOUSE BILL 2353
State of Washington 69th Legislature 2026 Regular Session
By Representatives Keaton, Leavitt, Klicker, Zahn, and Jacobsen
Prefiled 01/09/26. Read first time 01/12/26. Referred to Committee
on Capital Budget.
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(2) The director of financial management shall provide all 1
agencies with a complete set of operating and capital instructions 2
for preparing a statement of proposed expenditures at least thirty 3
days before the beginning of a fiscal period. The set of instructions 4
need not include specific appropriation amounts for the agency.5
(3) Within forty-five days after the beginning of the fiscal 6
period or within forty-five days after the governor signs the omnibus 7
biennial appropriations act, whichever is later, all agencies shall 8
submit to the governor a statement of proposed expenditures at such 9
times and in such form as may be required by the governor.10
(4) The office of financial management shall develop a method for 11
monitoring capital appropriations and expenditures that will capture 12
at least the following elements: 13
(a) Appropriations made for capital projects including 14
transportation projects; 15
(b) Estimates of total project costs including past, current, 16
ensuing, and future biennial costs; 17
(c) Comparisons of actual costs to estimated costs;18
(d) Comparisons of estimated construction start and completion 19
dates with actual dates; 20
(e) Documentation of fund shifts between projects.21
This data may be incorporated into the existing accounting system 22
or into a separate project management system, as deemed appropriate 23
by the office of financial management. 24
(5)(a) Except as provided for under subsection (6) of this 25
section, the office of financial management, prior to approving 26
allotments for major capital construction projects valued over ((ten 27
million dollars )) $15,000,000, shall institute procedures for 28
reviewing such projects at the predesign stage that will reduce long-29
term costs and increase facility efficiency. The procedures shall 30
include, but not be limited to, the following elements:31
(((a))) (i) Evaluation of facility program requirements and 32
consistency with long-range plans; 33
(((b))) (ii) Utilization of a system of cost, quality, and 34
performance standards to compare major capital construction projects; 35
and 36
(((c))) (iii) A requirement to incorporate value-engineering 37
analysis and constructability review into the project schedule.38
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(b) Beginning July 1, 2027, the office of financial management 1
shall adjust the $15,000,000 cost threshold in (a) of this subsection 2
(5) annually to reflect the C-100 form's inflation factor.3
(6) The office of financial management may make an exception to 4
some or all of the predesign requirements in subsection (5) of this 5
section. The office of financial management shall report any 6
exception to the fiscal committees of the legislature and include: 7
(a) A description of the major capital project for which the 8
predesign waiver is made; (b) an explanation of the reason for the 9
waiver; and (c) a rough order of magnitude cost estimate for the 10
project's design and construction. 11
(7) In deliberations related to submitting an exception under 12
subsection (6) of this section, the office of financial management 13
shall consider the following factors: 14
(a) Whether there is any determination to be made regarding the 15
site of the project; 16
(b) Whether there is any determination to be made regarding 17
whether the project will involve renovation, new construction, or 18
both; 19
(c) Whether, within six years of submitting the request for 20
funding, the agency has completed, or initiated the construction of, 21
a substantially similar project; 22
(d) Whether there is any anticipated change to the project's 23
program or the services to be delivered at the facility;24
(e) Whether the requesting agency indicates that the project may 25
not require some or all of the requirements in subsection (5) of this 26
section due to a lack of complexity; and 27
(f) Whether any other factors related to project complexity or 28
risk, as determined by the office of financial management, could 29
reduce the need for, or scope of, a predesign. 30
(8) If under subsection (6) of this section, some or all of the 31
predesign requirements under subsection (5) of this section are 32
waived, the office of financial management may instead propose a 33
professional project cost estimate instead of a request for predesign 34
funding. 35
(9) No expenditure may be incurred or obligation entered into for 36
such major capital construction projects including, without 37
exception, land acquisition, site development, predesign, design, 38
construction, and equipment acquisition and installation, until the 39
allotment of the funds to be expended has been approved by the office 40
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of financial management. This limitation does not prohibit the 1
continuation of expenditures and obligations into the succeeding 2
biennium for projects for which allotments have been approved in the 3
immediate prior biennium. 4
(10) If at any time during the fiscal period the governor 5
projects a cash deficit in a particular fund or account as defined by 6
RCW 43.88.050, the governor shall make across-the-board reductions in 7
allotments for that particular fund or account so as to prevent a 8
cash deficit, unless the legislature has directed the liquidation of 9
the cash deficit over one or more fiscal periods. Except for the 10
legislative and judicial branches and other agencies headed by 11
elective officials, the governor shall review the statement of 12
proposed operating expenditures for reasonableness and conformance 13
with legislative intent. The governor may request corrections of 14
proposed allotments submitted by the legislative and judicial 15
branches and agencies headed by elective officials if those proposed 16
allotments contain significant technical errors. Once the governor 17
approves the proposed allotments, further revisions may at the 18
request of the office of financial management or upon the agency's 19
initiative be made on a quarterly basis and must be accompanied by an 20
explanation of the reasons for significant changes. However, changes 21
in appropriation level authorized by the legislature, changes 22
required by across-the-board reductions mandated by the governor, 23
changes caused by executive increases to spending authority, and 24
changes caused by executive decreases to spending authority for 25
failure to comply with the provisions of chapter 36.70A RCW may 26
require additional revisions. Revisions shall not be made 27
retroactively. However, the governor may assign to a reserve status 28
any portion of an agency appropriation withheld as part of across-29
the-board reductions made by the governor and any portion of an 30
agency appropriation conditioned on a contingent event by the 31
appropriations act. The governor may remove these amounts from 32
reserve status if the across-the-board reductions are subsequently 33
modified or if the contingent event occurs. The director of financial 34
management shall enter approved statements of proposed expenditures 35
into the state budgeting, accounting, and reporting system within 36
forty-five days after receipt of the proposed statements from the 37
agencies. If an agency or the director of financial management is 38
unable to meet these requirements, the director of financial 39
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management shall provide a timely explanation in writing to the 1
legislative fiscal committees. 2
(11) It is expressly provided that all agencies shall be required 3
to maintain accounting records and to report thereon in the manner 4
prescribed in this chapter and under the regulations issued pursuant 5
to this chapter. Within ninety days of the end of the fiscal year, 6
all agencies shall submit to the director of financial management 7
their final adjustments to close their books for the fiscal year. 8
Prior to submitting fiscal data, written or oral, to committees of 9
the legislature, it is the responsibility of the agency submitting 10
the data to reconcile it with the budget and accounting data reported 11
by the agency to the director of financial management.12
(12) The director of financial management may exempt certain 13
public funds from the allotment controls established under this 14
chapter if it is not practical or necessary to allot the funds. 15
Allotment control exemptions expire at the end of the fiscal biennium 16
for which they are granted. The director of financial management 17
shall report any exemptions granted under this subsection to the 18
legislative fiscal committees. 19
Sec. 3. RCW 43.82.035 and 2021 c 54 s 3 are each amended to read 20
as follows: 21
(1) The office of financial management shall design and implement 22
a modified predesign process for any space request to lease, 23
purchase, or build facilities that involve (a) the housing of new 24
state programs, (b) a major expansion of existing state programs, or 25
(c) the relocation of state agency programs. This includes the 26
consolidation of multiple state agency tenants into one facility. The 27
office of financial management shall define facilities that meet the 28
criteria described in (a) and (b) of this subsection.29
(2) State agencies shall submit modified predesigns to the office 30
of financial management and the legislature. Modified predesigns must 31
include a problem statement, an analysis of alternatives to address 32
programmatic and space requirements, proposed locations, and a 33
financial assessment. For proposed projects of twenty thousand gross 34
square feet or less, the agency may provide a cost-benefit analysis, 35
rather than a life-cycle cost analysis, as determined by the office 36
of financial management. 37
(3) Projects that meet the capital requirements for predesign on 38
major ((facility)) capital construction projects ((with an estimated 39
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project cost of 10 million dollars or more )) pursuant to ((chapter 1
43.88)) RCW 43.88.110 shall not be required to prepare a modified 2
predesign. 3
(4) The office of financial management shall require state 4
agencies to identify plans for major leased facilities as part of the 5
ten-year capital budget plan. State agencies shall not enter into new 6
or renewed leases of more than one million dollars per year unless 7
such leases have been approved by the office of financial management 8
except when the need for the lease is due to an unanticipated 9
emergency. The regular termination date on an existing lease does not 10
constitute an emergency. The department of enterprise services shall 11
notify the office of financial management and the appropriate 12
legislative fiscal committees if an emergency situation arises.13
(5) For project proposals in which there are estimates of 14
operational savings, the office of financial management shall require 15
the agency or agencies involved to provide details including but not 16
limited to fund sources and timelines. 17
Sec. 4. RCW 43.88.0301 and 2024 c 344 s 7 are each amended to 18
read as follows: 19
(1) The office of financial management must include in its 20
capital budget instructions a request for "yes" or "no" answers for 21
the following additional informational questions from capital budget 22
applicants for all proposed major capital construction projects 23
valued over (($10,000,000)) $15,000,000, adjusted annually for the 24
C-100 form's inflation factor beginning July 1, 2027, and required to 25
complete a predesign: 26
(a) For proposed capital projects identified in this subsection 27
that are located in or serving city or county planning under RCW 28
36.70A.040: 29
(i) Whether the proposed capital project is identified in the 30
host city or county comprehensive plan, including the capital 31
facility plan, and implementing rules adopted under chapter 36.70A 32
RCW; 33
(ii) Whether the proposed capital project is located within an 34
adopted urban growth area: 35
(A) If at all located within an adopted urban growth area 36
boundary, whether a project facilitates, accommodates, or attracts 37
planned population and employment growth; 38
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(B) If at all located outside an urban growth area boundary, 1
whether the proposed capital project may create pressures for 2
additional development; 3
(b) For proposed capital projects identified in this subsection 4
that are requesting state funding: 5
(i) Whether there was regional coordination during project 6
development; 7
(ii) Whether local and additional funds were leveraged;8
(iii) Whether environmental outcomes and the reduction of adverse 9
environmental impacts were examined. 10
(2) For projects subject to subsection (1) of this section, the 11
office of financial management shall request the required information 12
be provided during the predesign process of major capital 13
construction projects to reduce long-term costs and increase process 14
efficiency. 15
(3) The office of financial management, in fulfilling its duties 16
under RCW 43.88.030(6) to create a capital budget document, must take 17
into account information gathered under subsections (1) and (2) of 18
this section in an effort to promote state capital facility 19
expenditures that minimize unplanned or uncoordinated infrastructure 20
and development costs, support economic and quality of life benefits 21
for existing communities, and support local government planning 22
efforts. 23
(4) The office of community development must provide staff 24
support to the office of financial management and affected capital 25
budget applicants to help collect data required by subsections (1) 26
and (2) of this section. 27
(5) The office of financial management must include in its 28
capital budget instructions, beginning with the instructions for the 29
2025-2027 biennium, information informing awarding authorities, as 30
defined in RCW 39.116.010, of the requirements of chapter 39.116 RCW, 31
including the data and information requirements in RCW 39.116.020.32
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